September 7, 2010

General Electric steps up participation in new wind projects

BOISE, Idaho

Like other U.S. investors in sustainable electricity, General Electric has stepped up its participation in new wind projects because of federal incentives.

GE’s latest wind-power investment is a majority stake in Idaho’s largest wind farm, a 122-turbine, US$500 million complex due to produce enough electricity for some 43,000 homes.

GE’s participation was solidified with the promise of more than $100 million in grants from a U.S. Department of Treasury program that’s pumped $5.1 billion into U.S. renewable energy projects in the last 18 months. It has helped kick-start wind farms in California’s mountains, geothermal stations that tap boiling water beneath Nevada’s desert, even solar equipment at a Wisconsin cranberry marsh.

In April, the Lawrence Berkeley National Laboratory in California said wind projects that may have been enabled by the stimulus grants created 51,600 construction jobs and 3,860 permanent jobs. Nearly two-thirds of wind projects and all geothermal plants built in 2009 took the grants.

GE’s project in Idaho expects to create 175 construction jobs and 25 permanent jobs.

Grant recipients say risk-leery bankers have grown more willing to give them money, knowing that renewable developers will quickly get 30 per cent of eligible capital costs back, to reduce their debts.

But the grant program expires this year, so energy developers and lawmakers are pushing Congress to extend it until 2012, though they fear election-year politics and possible cost concerns will be a roadblock.

Failure won’t kill renewable energy development, but advocates say wind, geothermal and solar power projects would likely slow.

“Industry is already challenged with difficulties in getting power contracts at a price that makes sense,” said Alex Urquhart, president and chief executive officer of GE Energy Financial Services, before touring his new Idaho project. “If you take away the grant, you further dampen the market— you add cost to projects that may already be challenged.”

For years, the U.S. government steered cash to renewable energy development by offering tax credits.

But when financial markets collapsed in 2008, banks and other investors no longer had an appetite for those, leading Congress and U.S. President Barack Obama to approve the cash grants with the American Recovery and Reinvestment Act of 2009.

So far, most grants have gone to wind projects like GE’s because they can be built quickly and thus qualify for stimulus project completion deadlines. So, far solar accounts for just five per cent of grant recipients.

Associated Press

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